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Monday, 31 May 2010
Page: 4687

Mr KATTER (5:56 PM) —With all due respect to the worthy member for Braddon, he said that the opposition are indulging in scare tactics. If I was the Labor member, I would be scared because if you think that you are going to convince the miners of Australia that you are going to hit the mining industry with a 40 per cent tax and that is not going to affect their jobs then you truly believe that the abominable snowman comes from Baduri.

I have seen some incredible thought processes convincing themselves that this is going to be good and trying to convince the Australian nation that this is going to be good. Let it be understood that the average Australian understands that the governments of Australia—of both political persuasions—completely destroyed manufacturing in this country. They went to a free trade regime when no other country on earth went to a free trade regime or even anything even remotely resembling a free trade regime. But they insisted upon going to a free trade regime as some sort of example setting for the rest of the world. We were going to be the wunderkind of the world.

The previous speaker, the member for Braddon, quoted all of these economists. I call them slithering suits out of Sydney. We see them pontificating every night on the television and in the newspapers. We have to judge them upon their merits. They have lauded the government for introducing free-trade policies. Let us have a look at manufacturing. There are three great divisions of the Australian economy, the productive side of the Australian economy: manufacturing, agriculture and mining.

Let us look at manufacturing. I emphasise that all of the economists and all of the so-called people that are in the field of money in Sydney and Melbourne said this was going to be wonderful for us. The ORANI model was produced by the Productivity Commission. I cannot remember the exact figures, but they ran something like this: if we removed motor vehicle tariffs then there would be a 20 per cent intrusion over 10 years. There was a 50 per cent intrusion over five years. Mrs Orani, the wife of one of them, should sue for defamation as a result of her name being used on such a report. There were people who stood up in this place and said how wonderful it would be for us. The whole reason for this free trade was that it was going to cut the price of a motor car. If I remember correctly the price of a motor car then was about $16,000 and within 10 years it had doubled in price. It had not gone down in price; it had doubled in price.

Mr Deputy Speaker Schultz, you were in the processing of agricultural product. In actual fact in agriculture the processing element has been historically bigger than the actual farming element in agricultural production. We pleaded with the government not to deregulate the wool industry, and one side of this parliament said, ‘We have to accept it because it is market realities,’ and the other side said, ‘It’s a good thing in the long run.’ John Maynard Keynes, the greatest economist probably of all times, said, ‘In the long run we will all be dead.’

So we sank down to the second lowest manufacturing sector of any country in the OECD with the exception of Turkey—hardly a great economic model to follow. Manufacturing was destroyed in this country. We saw motor vehicle manufacture fall from pre free trade where 72 per cent of the vehicles driven in Australia—prior to Mr Keating’s wonderful free trade initiatives—were Australian made. Now only 12 per cent of Australia’s motor vehicles are Australian made. When all of us were young people, our fridges, stoves, airconditioners and television sets were made in Australia. None of those things are now made in Australia. Manufacturing in this country effectively, as a generalisation, ceased to exist completely.

We listened to these people telling us how wonderful the brave new world will be for us and we realise now that those decisions were disastrous in the wool industry. When the industry was regulated, the price doubled over the next three years; when it was deregulated, it halved over the next three years. There cannot be a more definitive statement. In 1990 when Mr Keating, in his wisdom, deregulated that industry, 10 per cent of this nation’s income came from wool. It was bigger than coal. That is in 1990. That is not exactly ancient history. Most of the people in the parliament were here in the early 1990s.

We have wiped out manufacturing so we can move on to agriculture now. I have just mentioned the wool industry. I remind the chamber again that seven years ago Australia became a net importer of pork. I think everyone in this House would have eaten pork somewhere in the last week. Four years ago—it may have been three—we became a net importer of fruit and vegetables and last year we became a net importer of seafood. It does not matter what set of statistics you want to look at, whether it is in nine to 25 years time, this nation will be a net importer of food. Let me say to you, this nation will not be able to feed itself. That is the implication of those figures.

Manufacturing has ceased to exist, agriculture is going down the chute at 100 miles an hour. Let me again be very specific. Wool numbers are down 60 per cent. Cattle numbers are down around 20 per cent. In the sugar industry we close two mills every five years. That is three. The wheat industry is very much dependent upon seasonal climatic conditions, so I will not use that as an example and in dairying—which quite amazes me because I would not have thought that people would just stop drinking milk—but of course the manufacturing side of the industry has pulled it down about 15 per cent as well. There are your giant four agricultural industries. They are on desolation row. You have no manufacturing. Your agriculture is vanishing. What do you have left? You have mining.

I come into this place not like other people. I am one of the few who had copper dust—not coal dust, but copper dust—under my fingernails. I worked as a labourer at Mount Isa Mines and I was briefly a union rep there. I worked my own mines—I found them, I developed them myself and I produced copper from them. Prior to coming into parliament I was in the process of floating by own mining company. I know the mining industry intimately. I was Northern Development Minister and then Mines and Energy Minister in the Queensland government. Nobody in this country knows mining better than I do. Whether my kids were fed or not depended on whether I made the right decisions in mining.

In the mining industry, nine out of every 10 prospects will lose money—big money—so you have got to make enough profit on the 10th prospect. All of these great slithering suits from Melbourne and Sydney and all the very foolish people in the Labor Party are telling us how wonderful this mining tax is for us. I will give members of the Labor Party a word of advice: do not tie yourself to a sinking ship. To identify yourself with this cause is to simply chain yourself to the Titanic. Let me explain. The profits on the 10th mine have to cover the losses on the other nine. If there are not going to be any ‘super profits’ on the 10th mine then you will not have enough profits to cover the losses on the other nine prospects. So people will not mine in this country. They will go to a country where they can make super profits on that 10th mine. I should not have to tell anyone in this place that the metals market is a roller coaster. In 2006 the price for zinc was $4,000 a tonne but last year it was $1,000 a tonne. You had to be able to make enough profit in 2006 to carry you when the roller coaster goes down to $1,000 a tonne. But you would not be able to do that because the upswing of the roller coaster is truncated by the stats. If you cannot see that, there will be a terrible political price.

I actually think the government has done a very good job with the economy to date. I think the opposition are very misguided in criticising the government for spending money at the outbreak of the financial crisis. It is a great shame to see all of that good work destroyed by advice from Treasury that is simply flawed. Obviously, the man has not spoken. If you think there is no problem, why would the head of BHP—a person who has never really picked fights; he is not a confrontational person—suddenly become very confrontational? Why would Mike Davis, the head of Xstrata, take time off to talk about Australia when he is addressing the European Chamber of Commerce? Why would Mr Albanese, the head of Rio Tinto, take time off to talk about Australia when he is addressing the American Chamber of Commerce? Clearly, these people are not happy with this decision—to the point that they do not care about antagonising the government. They have nothing to lose in this country, so they might as well go for broke. The political implications of this for the ALP will be diabolical.

I wrote an article for the Financial Review some years ago—I think I was still in the National Party at that stage, but I might have just left—saying that the National Party in Queensland was going to pay a diabolical price for their failure to stand up to the powers that be in a number of areas. I said on the day before the state election that they were going to suffer a massive loss, and they suffered the worst loss in Queensland political history bar one. So I warn the current government in the same way. This is not to be nasty or threatening. They must simply understand that, in mining, nine out of 10 mines are going to lose money big. Therefore, you have to make a great profit from the 10th mine to cover the others. You have to make enough money on the upswing of the roller coaster to cover the downswing of the roller coaster.

Let me move on. Every mining company is going to bring in every one of their employees and contractors in and tell them: ‘We’ve been hit with a 40 per cent tax, fellas. If you think that is not going to affect job opportunities for yourself and for your kids, you don’t deserve to have a job in mining.’ That is what the bosses are going to say to them. When the bosses told them the IR legislation was going to be good for them, they did not believe the bosses; they believed the Labor Party. But this time they will believe the bosses, not the Labor Party. It is not like the old days, when the miners were great supporters of the Labor Party—far from it. The people working in mining today are far more sophisticated than the miners of the past. They have far more sophisticated attitudes. We saw that in electorates like Dawson, in North Queensland, when interest rate increases were threatening. With the Labor opposition under the leadership of Mark Latham, those people swung very strongly against the ALP in that election—and the member for Dawson had a very handsome majority of about 14 per cent. Just as they swung over to Labor over interest rates, when the IR legislation came in they swung violently back the other way—and Labor now holds Dawson with a four per cent majority. Anyone who thinks there will not be an effect in the mining areas is kidding themselves. Do you want me to name how many seats in New South Wales are partially mining seats and also marginal?

The other factor is that we have not had a lot of competition on the world stage. America and Europe have completely mined out their mines—the easy stuff, and even the hard stuff, has been taken away. America is mining coal at a depth of two kilometres. We would not dream of doing that in Australia. I say this to illustrate that the easy stuff in America and in Europe has gone. They are sophisticated economies that have heavily mined their land in the past. The countries that have not been mined are Brazil, the two Mongolias, all those other countries to the west of the two Mongolias, Kazakhstan and Russia. Brazil has traditionally had very unstable government. Mongolia has no infrastructure and virtually no government and is very remote. Russia, of course, was communist. Russia is no longer communist; it is a happy hunting ground. It is very much larger in area than Australia. Because it is a bigger country, there will be much more minerals there. You could almost put it in terms of tonnes of minerals per square kilometre. Brazil is a much bigger country than Australia. Even if you take out the super-wet belt of the Amazon, it is still a much bigger country than Australia—and it has not been touched. The two Mongolias and Kazakhstan are also much bigger than Australia. So we will now have dramatic competition from countries that are much bigger than us and will have much greater mineral wealth than we have. So, on top of everything else, there are alternatives to mining in Australia. Next year or the year after, BHP will mine more coal in Indonesia than it does in Australia—the leading coal exporting country on earth.

For those who are unfamiliar with mining, there is a thing called transfer pricing. I always thought Mitsubishi was the classic example of this. They sold silicon to themselves in Japan for $55 a tonne and the Queensland government bought it back as optical fibre. It does not cost a lot of money to transform the almost pure silicon, which we were exporting, into optical fibre, but we were paying $2 million a tonne for it. That is a simple example of transfer pricing. If you think that, when we bring this tax in, they ain’t gonna go to transfer pricing, you would believe in the tooth fairy!

People have the hypocrisy to say, ‘Oh, we’re standing aside and letting all this money go overseas.’ I pleaded and shouted in this place for something to be done, and I had a defamation action brought against me because of my efforts to try and stop the takeover of our mining companies by foreigners. But the governments of Australia—the ALP government and the Liberal-National Party government—sat on their hands and watched as the six giant mining companies of Australia were flogged off to overseas companies. This was to help the stock market—the great sacred God of modern society. Governments sat there and watched BHP, the great Australian, flogged off. They sat there and watched Western Mining Corporation flogged off. They sat there and watched CRA flogged off. They sat there and watched Mount Isa Mines flogged off. They sat there and watched Normandy Mining flogged off. They did nothing. In not one single case did they do a thing. Now that all the profits are flowing overseas—and very great profits, indeed—they are going to try and close the gate after the horse has bolted. Coming from the cattle industry, I know that that is a pretty useless thing to do, Mr Deputy speaker, let me tell you.

The governments of Australia, with their enlightened policies on manufacturing, have destroyed the manufacturing industries of Australia. People hate politicians, but that was not true when I was a young bloke. I felt great awe and reverence for some of the men of Australian politics—men like Sir John ‘Black Jack’ McEwen. Ask anyone in the street what they think of Mr Howard. Ask anyone in the street what they think of Mr Keating. I deeply regret to say this, because I personally like the current Prime Minister— (Time expired)